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Insurance reform group offers consumers Katrina Insurance Hotline

By Insure.com - Last updated: Nov. 10, 2005

After three days of staffing the Americans for Insurance Reform AIR (Americans for Insurance Reform) has received many calls from Louisiana and Mississippi residents who are insured by smaller insurance companies (not the major companies like State Farm, Allstate or Travelers). AIR set up the Katrina Insurance Hotline (888-450-5545), two weeks after the hurricane struck and could already report some important results after just three days of its operation.

Americans for Insurance Reform (AIR), a newly formed coalition of more than 60 consumer and public interest groups. AIR began its operations in 2000 to address poor business practices, shady accounting, and poor investment strategies of some of America’s largest insurers. AIR argues that the insurance industry is trying to solve its self-inflicted management problems by a spate of "excessive" rate increases.

Consumers have reported that their insurance carriers are saying they are unwilling to supply policyholders with immediate living expenses until a claims adjuster has inspected their property. At the same time, these insurance representatives are unwilling to provide policyholders with even a broad estimate of when such an inspection might happen. Numerous people have told AIR, “Our money is running out and our insurance companies can't tell us when or if any help is on the way.”

Several Katrina afflicted policyholders report that representatives of United Fire Insurance, which also owns Lafayette, Addison, American Indemnity, and United Fire Lloyds, are saying that the company has officially declared that the damage and forced evacuations in New Orleans and the out-lying areas were solely the result of flooding. While this apparent ruling has resulted in leaving many policy holders ineligible for the temporary “loss of use” funds guaranteed in their homeowners policies, if accurate, such a decision would have the long-term effect of leaving all of United Fire’s policy holders without flood insurance with little to no compensation for their damaged or destroyed homes. Calls to company headquarters for comment were not returned.

Louisiana resident Shawna Balding reported to AIR that on-the-ground representatives at Travelers had told her 78-year-old mother, a New Orleans resident whose home was flooded, that she would have to travel to Baton Rouge or Gulfport to pick up the check owed to her for “additional living expenses.” After Shawna called the AIR hotline, AIR mentioned the situation on national television. After that TV appearance, Travelers called AIR to say that their vice-president overseeing the Gulf Coast situation would personally ensure that this did not happen again. While it is unclear to AIR if Shawna’s mother was the victim of company policy or the company’s poor communication with claims representatives, AIR congratulates Travelers for correcting the mistake and ensuring that it will not happen again. AIR continues to monitor this situation.

AIR also applauds Shawna Balding for informing AIR of her situation, showing the power that individuals can have just by complaining. “People have power,” said J. Robert Hunter, AIR co-founder, Director of Insurance for the Consumer Federation of America and former Federal Insurance Administrator. “Just making your complaint known can change things. It is very important to speak out if you feel an injustice is being done to you as you try to rebuild your life after this awful hurricane damage."